Jobless rate 4th highest in U.S.

57.5% of state's adults working, report says

SACRAMENTO — On Labor Day 2009, what Californians need most is a lot more labor.

In its annual report on the state of working Californians, released today, the nonpartisan California Budget Project reports the job losses suffered during what is being called the “Great Recession” wiped out all the gains of the previous recovery and that the total number of jobs in the state is now roughly what it was nine years ago when there were 3.3 million fewer working-age adults.

“The current recession stands apart from prior downturns for both the depth and breadth of destruction in the job market,” the report says. “California has lost more jobs at a faster rate in the past two years than during any prior recession for which data are available, and employment has fallen in nearly every major sector of the economy.”

Because of the decline in the number of jobs coupled with growth in the labor force, the report finds that the percentage of working-age Californians who hold jobs has fallen to its lowest level in 32 years. Citing U.S. Bureau of Labor statistics, the report says just 57.5 percent of California adults are working.

The last time the percentage was that low was in 1977, a time when many women voluntarily chose not to work outside their homes. The percentage of employed adults peaked in 1989 at 64.9 percent.

Adding to the woes of workers, the report says, those who still have jobs are bringing home less money, the result of stagnant wages that haven’t kept pace with inflation and cutbacks in the number of hours worked per week.

As bad as things are this Labor Day, officials with the Budget Project say they would be worse if not for federal stimulus funds that have softened the economic effects of state budget cuts, put more take-home pay into the pockets of middle-class workers and extended unemployment insurance benefits to hundreds of thousands of Californians.

Executive Director Jean Ross said the severity of the job losses — and the bleak prospects for job-creation, at least in the early stages of recovery — argue strongly for continued federal aid.

She urged Congress to “extend the federally supported Unemployment Insurance extended benefit program. Keep those dollars flowing to unemployed workers, who then turn around and spend them in their local economy.”

Without an extension of the federal program, Ross said that 178,000 jobless Californians will lose their unemployment benefits by the end of the year.

Ross noted the consensus among economists is that growth in the gross domestic product would have been 2 percentage points lower without the infusion of money from the federal stimulus package, the American Recovery and Reinvestment Act.

“Without the federal dollars from ARRA, things would be a lot worse,” she said. “State budget cuts would have been deeper, unemployed workers would have had less money to spend. As great as all of those things have been, we need more.”

California has been hit more severely by the recession than most states — its unemployment rate is now the fourth-highest in the nation — and the reason, the report says, is the state is paying the price for a housing market that was hyper-inflated before the real estate bust.

Job losses since the beginning of the recession have been most severe in the housing sector. Employment in the construction industry is down nearly 30 percent, and jobs in financial services associated with mortgages, escrows and other housing-related transactions are off 11 percent.

“During the last recovery, housing and housing-related industries contributed about 60 percent of the job growth,” Ross said. “Housing during the early years of this decade just drove the California economy. It is hard to overstate the importance of housing over the last decade.”